I Call For A New Credit Card, Am Told My Account Is Canceled

Andrew thought everything was fine with his Bank of America credit card account, save for the physical card itself, which was frayed and needed to be replaced. Then he called customer service and was told not only would he not receive a new card, but his account would be killed because of delinquency.

Wondering whether or not the cancellation would have happened if he hadn’t called in, Andrew writes:

I called the Bank of America customer service, to ask for a new card as my current card is falling apart.

After, making the arrangements to have the card sent, I was asked to wait as I was transferred to another department for a couple of questions.

Upon being transferred, and asked several questions about my income, where I preside, and other questions I was told that my card was being canceled because of a delinquency on my credit report. I explain the problem, of the delinquency as it was a medical bill that I was paying off from a recent surgery, that went to collection because of an error and mistake on my part.

They further explained that it was policy, that they were canceling my card because of this delinquency. Even though, this delinquency has existed couple months prior, and it was only till then after asking for a new card, that they would cancel my account.

On one hand, Andrew has to wonder whether or not he’d still have a functioning credit card had he not called in. On the other, if his card was going to be canceled it’s better that it happened at home rather than when he was trying to pay a bill or make a purchase.

Has anything like this happened to you?

Comments

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  1. Cheap Sniveler: Sponsored by JustAnswer.comâ„¢ says:

    where I preside?

  2. framitz says:

    Why is this here at all. You don’t pay your bill your get cancelled.
    Calling might have helped get it cancelled because it brought it to the banks attention. I suspect if the OP had tried to use the card it would have been rejected.

    • GearheadGeek says:

      RTFA. It was the credit card account that had a delinquency, it was a medical bill that had gone to collections. He didn’t owe BofA money.

    • Alisha Gray says:

      The bill that caused the error wasn’t with the credit card company.

    • kc2idf says:

      The delinquency, had nothing, to do with Bank, of America,

    • nealbscott says:

      The story says the delinquency was found ‘on my credit report’ It doesn’t say the delinquency was owed to the credit card folks. In fact they had to look it up on a credit report to even know about it. Kinda argues that credit card was closed because he owes money to *someone else*. Did I miss something?

    • silver-spork says:

      Wow, reading comprehension fail.

      Still, universal default still applies and if you have known issues with your credit report, it’s probably best not to call the bank for anything.

    • Cheap Sniveler: Sponsored by JustAnswer.comâ„¢ says:

      I’ts not that he was late on the credit card bill, but rather an unrelated bill due to surgery.

      • tooluser says:

        Oh but it wasn’t unrelated. His contract with the card issuer connected his other debts — anything that shows up in his credit report — to his continued access to the account.

        Sucks yes, stupid yes, but true.

    • backinpgh says:

      Why is this comment here at all? You don’t RTFA, and you say stupid things that don’t make sense.

    • runswithscissors says:

      You’re my new favorite chronic and unreasonable OP blamer. Every story! Each less creative than the last!

  3. iggy21 says:

    ouch… but what are you going to do.. Life sometimes hands you lemons…

  4. PunditGuy says:

    Universal default loophole. They can’t raise your rates based on universal default, but they can apparently close your account. Nice. And by “nice,” I mean, “pitchfork time.”

    • Cheap Sniveler: Sponsored by JustAnswer.comâ„¢ says:

      It’s not so much the card being canceled instead of raising rates under universal default, but rather that a single delinquency was enough to trigger a cancellation. That’s what bothers me.

  5. mantari says:

    I thought Universal Default was taken care of by Congress. Or is this something different?

    • theblackdog says:

      Something different, universal default meant they could raise your rates through the roof, not necessarily cancel.

  6. FireJayPa says:

    Wll, myb f h hd pd hs blls h wldn’t b n ths mss. H clrl knw h ws bhnd n hs blls nd h hd th dct t sk fr nw crd? Fr wht? S h cld rng p mr chrgs h wldn’t p? s gd n hm. hp n n ls gvs hm ln f crdt thr

    • Kryndis says:

      Reading’s not really your strong suit, eh?

    • sheriadoc says:

      RTFA. He didn’t owe BoA any money.

    • Tim says:

      Seriously? You act like if someone screws up once and it shows up on a credit report, he shouldn’t be extended credit ever again. He was delinquent on some medical bills, and he makes it clear that he’s paying them off.

      I hope you never make decisions about extending credit to anyone.

    • Mom says:

      Yep, he really shouldn’t have gotten sick and needed surgery that he couldn’t pay for.

    • Gorbachev says:

      Excellent trolling there, troll.

      • Nigerian prince looking for business partner says:

        “Excellent trolling there, troll.”

        I’d give him a C- in terms of trolling. A good troll is much less obvious.

    • myCatCracksMeUp says:

      You a fucking idiot.

      He wasn’t charging anything he couldn’t pay on his credit card.

      The credit report showed a problem from a medical bill that became deliquent because of some error and a mistake on his part.

      Try being a fucking person sometime.

  7. Tim says:

    Wait, is BoA allowed to look at his credit report if he doesn’t apply for new credit?

    If so, it was bound to happen at some point when BoA did a regular check-up. It would have been good if he could have sorted out the delinquency problem before BoA’s check-up though.

    • Portlandia says:

      Uh yes, I’m sure somewhere in the cardholder agreement he signed it says they’re allowed to review his credit periodically to determine credit worthyness.

    • Mom says:

      Yes, of course. They do it all the time. If you have credit cards, the card issuer will check your credit regularly. They’re taking a risk giving you an open line of credit. If you suddenly lose your job and start trying to live on your credit cards, they want to know about it.

      And yes, BofA would have noticed on its own within a couple of months anyway.

    • Nigerian prince looking for business partner says:

      Yes, if you look at your credit report you’ll likely see numerous soft inquiries from banks where you have revolving accounts.

  8. swarrior216 says:

    They did him a favor.

  9. Skellbasher says:

    Could have sworn that punitive measures by one bank because of problems with an unrelated bank were outlawed in 2009, but I could be wrong.

  10. damageinc says:

    I see no issue here.

  11. gc says:

    American Express closed my account on a credit card that I had been paying the minimum on, but then was able to pay off in a large sum. Never had a late payment. When I went to pay for a pair of glasses with my newly-paid-off card, it was declined. Called AmEx and discovered that they had canceled my account. But, no one called or emailed. I received a letter in the mail 2 weeks later. I had been a customer for 5 years.

  12. Andy Dufresne says:

    So you’re saying that if I just stop paying on my Citibank and Wells Fargo credit cards that Bank of America should not consider that a red flag and cancel my account? Whether the delinquency on his credit report was medical, automotive, or just a cable bill, it defies logic to assume that other creditors won’t be alarmed if you don’t pay your debts…they are responsible for keeping tabs on their borrowers and exercising their rights under the cardholder agreement when necessary.

    • dolemite says:

      Yeah, problem is, sometimes (and frequently are)mistakes are made by credit companies or other companies. I had a collections show up on my credit report because of my previous auto insurance company, even though I was paid up with them. They decided to bill me for the next month after I canceled my policy, even though I was already paid up with a new company. I didn’t receive any bill or notice and it went to collections. Now it shows up on my credit report, despite the fact I called the previous insurer after the fact and they agreed I didn’t owe the money. So according to you, all of my credit card companies should be able to just cancel me on the spot? Because if they did, even after I cleared up my credit report from the false charge…good luck building up 20 years of credit from scratch again.

      • psm321 says:

        You should be able to get that cleared completely from your report with disputes. check out some of the credit forums (i think one is called creditboards, but not sure off the top of my head)

        • dolemite says:

          Yeah, but according to some people on here, all of my creditors should just ditch me at the drop of a hat because one negative showed up on my report, and disputes can take awhile. Does anyone think I’ll be able to call Citibank and all the rest back 3-4 months after it’s cleared up and go “Hey, remember you guys canceled my 20 year old account last year because of a false negative? Well, I’d like you to open that up again.” Yeah, right.

          • psm321 says:

            Yeah, I wasn’t defending the universal default-like practice, just informing you in case you didn’t know.

      • frank64 says:

        I am saying there should be no law preventing them from canceling credit, as many have said, credit is not a right. I do think the banks should decide that certain cases actually don’t mean that the person is and added risk. They need to balance risk and profitability, in the past they actually extended credit they should not have.

  13. MNGirl says:

    I had something like this happen to me with my Goodman Jewelers card. I got my card in Sept. 07, and used it to get my $800 wedding ring, and paid the entire balance off within 2 months, (even though I had a year), went in and bought another ring for about $500, paid that one off within a month, and then bought 2 necklaces, about $300, and paid that off in about 2 months. I go in one day to get a necklace and another ring, and when I try to use my card it was canceled. When I call them they say it was because my credit score had dropped. I couldn’t believe they did that to me after everything I had bought from them, (I even got the warranties on each piece I bought.) and always paid off my card within a few months. I have not been back there sense.

  14. Portlandia says:

    Yes by all means…BofA should not be allowed to deny him credit because he’s delinquent on another account.

    /sarcasm

    Really? Does that make sense now? You don’t think your credit standing with other institutions should be factored into how credit worthy someone is?

    • Portlandia says:

      damn, this was a response to Skellbasher’s comment above….sigh…twice today.

    • Tyanna says:

      I think it makes sense. I mean, if I’ve never been late paying my credit card and they have never had any issue with me, why would they cancel my account while I’m still in good standing with them?

      I could understand them putting the guy on a ‘watch’ list to see if his account goes sour. If so THEN cancel it. But b/c someone else flagged him (in error at that) he deserves to have all his other accounts canceled when he’s still in good standing?

    • selmorestuff says:

      No, I don’t think they should.
      Actually, I think the money changers should not be allowed to see what arrangements I have with anyone else.

  15. miball says:

    I had BofA close out one of my credit cards, I didn’t know till I called in to get a new card also. They told me I was welcome to apply again, it wasn’t due to any delinquency though, it was just that I hadn’t used the card in a few years. I was not very happy as it was my oldest credit card.

    • frank64 says:

      They are right to have done this, not using a card means no profit for them, but there is still risk. I think they need to monitor the credit they extend, and it would best be used with people who at least use the card.

  16. slim150 says:

    does that mean they did a credit pull while he was on hold? or do they have realtime access to it?

  17. Rebecca K-S says:

    I’m curious how delinquent he was.

  18. Little Wooden Boy says:

    This actually happened to me too (I wrote to Consumerist about it but never made the site). I called about a credit line increase on one card and they canceled another card of mine that had a zero balance on it. Just because they could.

    • frank64 says:

      On creditboards they say to never call BOA. I guess they are right!

      One things that surprises me is why does calling BOA do anything different? They monitor your reports all the time, they should do this the first time a derog shows up on the soft pulls they do. Maby the soft pulls don’t flag some things and a human needs to look at it? I thought the computers would be able to do it.

  19. Cheap Sniveler: Sponsored by JustAnswer.comâ„¢ says:

    At firs tglance, this seems to defy the ban on “universal Default rates” however, from
    http://www.creditslips.org/creditslips/2010/03/the-ban-on-universal-default.html :

    ***The first place I looked in the Cardmember Agreement was the paragraph labeled “Default/Collection.” I was looking for the much-touted restrictions on universal default. Here is what I read, to my initial surprise: “Your account may be in default if any of the following applies: . . . we obtain information that causes us to believe that you may be unwilling or unable to pay your debts to us or to others on time.” Wait a minute. . . That sounds like my default (or purported default) on my debts to someone else is a default to JPMorgan Chase. Isn’t that what “universal default” is?
    Actually, no, at least not as defined in the legislation. The Credit CARD Act prohibits raising “any annual percentage rate, fee, or finance charge applicable to any outstanding balance” with a few exceptions. Notably absent from the list of exceptions is the ability to increase those charges based on a cardholder’s default to other creditors. But of course that is not what the JPMorgan Chase agreement permits. Rather, it says that I can be in “default” for being unwilling or unable to pay debts due to others, not that my charges can be increased. Under the Cardholder Agreement, a default permits JPMorgan Chase to close my account without notice and require me to pay my unpaid balance immediately. That is pretty grim result for a late payment to another creditor, even if it is not “universal default.” ***

    So it seems that BOA could not up his rates, so they simply canceled his account instead, thereby doing an end-run around congress and the intent of their silly laws.

    • Mom says:

      Thanks for looking that up. I was about to do the same. Frankly, the whole thing worked out better for Andrew than it would have before the CARD act. Before, the bank would have kept the account open, but jacked his interest rate up to 29%. TFA doesn’t say if he was running a balance on the card, but if he was, it would have become a much bigger balance very quickly. As it is, they ran his credit report, found that he was having trouble paying his bills, and decided not to lend him any more money. Annoying for Andrew, but I don’t see a problem, legal or otherwise.

    • frank64 says:

      It may not be an end run, they still canceled cards for things such as this before.

      I know you are not saying so, but I have seen some say in similar circumstances that things such as this mean the law is doing more harm, but he is much better off having his card canceled than having his rates on even past balances raised to 30%.

  20. Grungo says:

    Gotta watch out for this. Use it or lose it! I have an old card from a credit union that I don’t use because it doesn’t give any kind of reward points. However, it expires in June this year (and I’ve had it for 8+ years), so I’ve starting putting $100-200 in purchases a month on it to make sure that I get re-upped and not canceled for being unprofitable.

  21. Nigerian prince looking for business partner says:

    This is one of the scariest things about medical care in the USA. The billing and reimbursement system from insurance companies is so convoluted that it’s nearly impossible to not have some kind of screw up if you have any kind of significant treatment.

    It’s been my experience that providers are so used to not getting paid that they jump the gun and send bills to collection without even contacting you when there’s a problem. My wife just had a $700 bill for prenatal care sent to collections because the provider billed it to her old (from two years ago) insurance and when it was denied, they made no attempt to even contact us. At the same time, they were able to bill everything besides lab work and ultrasounds correctly. It took several months for them to run everything through the correct insurance and to remove the derogatory tradelines.

    • SugarMag says:

      I’m sorry to agree this is v. typical – AND once outsourced to a collection agency they will not verify the accuracy of the self-pay portion before dinging your credit report AND they will bill you as self-pay even if it is an insurance mixup.

      I am in the business and immediately assume all my claims will get messed up and reported – esp. since the bad debt agencies do not follow the law.

      The fact providers are so secretive doesnt help either (as in, they dont send me statements regarding the services rendered, regardless of the status with my insurance company. It would prompt people to be involved before it is too late).

  22. frank64 says:

    What needs to happen is companies that put negatives on credit reports in error or without trying to resolve the issue first should be penalized, and the credit agencies should have stricter rules. Banks may want to give people the benefit of the doubt in certain cases. They lost a customer for life, and with it the potential profits. I don’t think banks should be compelled to do it, just it might actually be in their best interest too. It is too easy to get a negative on a report, sometimes it is just a mistake in your insurance company not paying a bill and you not finding out about it. The banks should take this into account. A good bank needs to manage risk, but if you do it wrong, you don’t actually lower risk, but do you lose income.

    Things like this should be a lesson for us to never be at a place when we need the likes of BOA. Save up a cushion so that a CC is just a matter of convenience.

  23. frank64 says:

    What needs to happen is companies that put negatives on credit reports in error or without trying to resolve the issue first should be penalized, and the credit agencies should have stricter rules. Banks may want to give people the benefit of the doubt in certain cases. They lost a customer for life, and with it the potential profits. I don’t think banks should be compelled to do it, just it might actually be in their best interest too. It is too easy to get a negative on a report, sometimes it is just a mistake in your insurance company not paying a bill and you not finding out about it. The banks should take this into account. A good bank needs to manage risk, but if you do it wrong, you don’t actually lower risk, but do you lose income.

    Things like this should be a lesson for us to never be at a place when we need the likes of BOA. Save up a cushion so that a CC is just a matter of convenience.

    • frank64 says:

      I got an error message and hit submit again. Hopefully someone can delete.

      • Cheap Sniveler: Sponsored by JustAnswer.comâ„¢ says:

        “Welcome to Consumerist! You have just experienced error #78ty23. Please correct your error by using the *edit* button.”

  24. nicoleintrovert says:

    This isn’t anything odd. I work for a credit union. Our VISA is set up for some folks that it will not be reissued at the renewal date due to current dings on their credit report. Because this guy called in earlier than the renewal date, they informed him sooner that a new card could not be issued and this one would close.

  25. frank64 says:

    One thing I think should change is co-signers could run into the same issue. If you co-sign and a person is late, even if you find out and pay the bill later, you still get hit on your report as you paid late. It really does not reflect your credit risk. I would want the banks to not hit your report if the other person was late until at least the co-signer is notified and is given the opportunity to pay. This should be done by the bank that does the loan, but absent that, hopefully some banks would adjust your risk profile if you went in for a loan.

  26. stevied says:

    Good, bad or otherwise your account will be manually reviewed whenever you make an inquiry.

    You had a delinquency and per the terms of your contract your account was appropriately closed.

    Next time pay all of your bills on time or otherwise don’t call the bank

    • frank64 says:

      Life must be very easy for you, everything being is black and white and all. (:

    • selmorestuff says:

      I used to be an old crusty P.I.T.A. like you till I thankfully ran into financial problems. It changed my outlook on those lowlife minimum payment people cause I became one.

  27. iwantansi says:

    same thing happened to me about 3 months ago… same exact cirumstances

  28. DH405 says:

    OMG WHAT A HORRIBLE ARTICLE! I KNOW ITS BAD BECAUSE IT HAS PHIL’S NAME ON IT!!!

    J/k. I enjoy all of the contributors articles, including Phil’s. I’m tired of people giving him shit for no reason.

  29. FrugalFreak says:

    Great on all means, no credit card = zero extra interest money for BOA. Let the wealthy only have credit, we will just stop spending ours in Ya;lls businesses. FAIL for the upper class!

  30. gpatrick902 says:

    Universal Default rule was eliminated by congress. I don’t think the full rule was show in a earlier post. They are not to do any adverse reaction if you are late on another creditor. If it was medial or utility unpaid debt they are not suppose to include those at all. I heard this on my local news.

    To the other posters saying he should pay the bill. Read the article again, he is paying the bill. He was just late, tell he could reach a payment agreement. He needs to dispute that delinquency because it sounds like they medical company s is reporting him late, when they have a payment arrangement. By the way insurance does not cover everything.

  31. sheriadoc says:

    I recently called BoA and fully expected them to give me the heave-ho. I wouldn’t have protested since they are evil. I can’t seem to leave them on my own. I have two cards with them, a Signature card that was originally a Gold card (my first ever CC) and my Alaska Airlines Signature card. I don’t use the original one anymore as I don’t receive any kind of rewards. I thought, hey, I’ll call and see if they can merge them.

    So I called. Told the guy what I wanted to do. He confirmed it was possible, then said he was transferring me to an account specialist. Uh oh! The new guy asked me a bunch of questions pertaining to employment and my living situation. Yes, I’m unemployed. Have been for almost a year. Yes, I rent, but I pay half as I live with my boyfriend. Yes, I do have income in the form of a large savings account thanks to a settlement I received.

    In the end, the cards were merged but they cut my credit to $5k. Which I’m fine with. Perhaps that’ll lower my credit score, but that really won’t effect me. The guy even complimented me on how well I was doing with my account considering I was unemployed. Not sure if he was being sarcastic, but I said thanks. Yes, I do pay the entire balance in full each month. No, you do not get late fees or interest from me.

  32. selmorestuff says:

    My credit card, card house all came crashing down one time when Goodyear lowered the amount of credit on my card from 5000 to 2000. At the time, I had about a 1700 average and was paying minimum and sometimes would pay more.
    When I had 5000 in credit with a 1700 balance, I was only using 30% of balance. When they lowered it to 2000 the balance/total % jumped to 80% (+/-). This screwed up my score and guess what the other lenders did? You guessed it. They lowered their available balance, etc.
    Anyway, its not a big deal now. I told them all to use the federal bailout “to big to fail” money to pay off my balances.

  33. gman863 says:

    This is why it’s good to keep an extra credit card or two around.

    I have three “dormant” cards with a combined line of around $20K, each from a different bank or credit union. I use each once or twice a year on a small purchase and pay them in full when the bill shows up.

    * If your main card issuer pulls a stunt like this, you have immediate backups.

    * Open credit lines (built up over a few years) generally improve your credit score (available credit versus amount owed). If one or two cards whack your credit limit it’s less of a hit on your credit score.

    If the OP only has one bad hit on their report, sit back and wait a week or two. I know people who defaulted and settled with Citi, Chase and BoA to the tune of $30K who are getting weekly “pre-approved” offers from CapOne and other banks.

  34. pot_roast says:

    I have heard of this happening with other credit cards. Too many inquiries, new delinquencies, and other credit report dings will cause your account to be closed or credit limit slashed.

    The people at the MyFICO forums have been talking about this very thing. It’s not just limited to Bank Of America, even though they’re a popular target around here.

  35. Anomaly69 says:

    I’ve had three bad experiences with this bank that have made me decide NEVER to have anything to do with them again. Two were working for them in contractor roles and one as a customer. They don’t treat their workers any better than their customers.

    I had a credit card with them that carried a balance of around $1400 for a few months. I always made my payments and usually paid extra and continued using the card, therefor the ongoing balance. One day I got some extra money and paid the card off, they promptly canceled it.

    As long as I carried a balance they could charge interest on they were happy to leave the card open. As soon as I stopped being a source of income I got kicked to the curb.